Remember back in school when you had easy classes and hard classes? How in the easy classes you’d get an ‘A’ and in the hard classes you’d get a ‘C-‘ (and other kids would get an ‘F’)? And then, when you finally completed a year of school you’d get a report card with something called a "Cumulative GPA"? That Cumulative GPA basically told your parents how you did at school over the whole year. Your individual "A’s, ‘B’s, and ‘C’s, all averaged out into the GPA and it (hopefully) read something like "3.204" and your dad said "That’s really great!" and let you borrow the car. Well, a credit score is the grown-up version of a cumulative GPA. Except it’s a lot harder to improve once it heads south.
All of your financial data is fed through a complicated computer program that only Bill Gates could comprehend and out comes a result-pop!-it’s your credit score. While you’d like to remember all the good financial decisions you’ve made, you’d also like to forget that one time you bought that brand-new mobile home and how, five months later, the nice kid from the bank came and drove it away because you hadn’t made the last few payments. Well, that incident gets averaged in to all the bills you have paid and it’s all reflected in your credit score. That magical, abstract, absolute number that nearly every potential creditor will look down at and stop smiling. If your number is high-if it’s like an ‘A’-you’ll get more credit offers than you can use. If your number is normal-if it’s like a ‘C’-you’ll get plenty of credit offers. If your number is like a ‘D’ or, worse, an ‘F’, you won’t be getting many credit offers at all.